LUKANYO MNYANDA: Another own goal by a party with two left feet

It’s probably safe to assume that President Cyril Ramaphosa’s investment envoys are, once again, tearing their hair out. 

Just to recap, the group, which includes former finance minister Trevor Manuel and former Standard Bank CEO Jacko Maree, was appointed at the height of the so-called Ramaphoria after Ramaphosa took over from Jacob Zuma as president. It was tasked with going out and securing $100bn in investment over five years, which Ramaphosa said was needed to boost the economy. 

Not everyone is convinced that this is the right order, arguing that foreign investment can’t be a driver of growth, that we need to first get our house in order and generate the confidence and economic expansion that will then see foreign capital flocking here in search of attractive returns. An economy that’s struggling to eke out growth of 1% is hardly enticing for holders of capital, who have many other choice destinations.

It wasn’t that long before Ramaphosa scored what could probably be described as an own goal with the clumsy announcement of the ANC’s desire to change the constitution to facilitate the expropriation of land without compensation. It meant that instead of selling the country, the envoys were preoccupied with questions around property rights and the rule of law.

Now, with the country waiting to see if it will lose its last remaining investment grade, Ramaphosa has once again dragged the Reserve Bank into the political arena.

Even before that infamous late-night announcement at the end of July 2018, Manuel had noted that explaining SA’s land debate was proving to be challenging. Instead of calming things down, we embarked on a months-long debate about the constitution, even though there is almost universal acceptance that the document is no impediment to the speedy implementation of land reform.

That was allowed to dominate the conversation, raising questions about the country’s commitment to its constitutional order more broadly. If the government could tinker with the country’s supreme law on the basis that “the people” demanded it do so on a particular issue, what’s to stop it trashing other protections in the future?  

Eventually, something resembling a sensible policy on land emerged and the ANC’s manifesto is very clear on the specific conditions in which expropriation without monetary compensation can take place. So much so that the debate has been somewhat relegated to the background.

It was noticeable that at a session Ramaphosa had with potential investors at the World Economic Forum annual meeting in Davos earlier in 2019, the land issue didn’t come up in the question-and-answer session. But much damage had been done before getting to that point. 

Another issue we thought had been kicked to touch, or at least down the road, was debate around the independence of the Reserve Bank. In the immediate aftermath of the governing party releasing an election manifesto that said the Bank should consider growth and job creation when setting policy, Ramaphosa and finance minister Tito Mboweni were quick to emphasise that its independence was sacrosanct. 

And now, with the country waiting to see if it will lose its last remaining investment grade, Ramaphosa has once again dragged the Bank into the political arena.

While answering questions about the ANC’s 2017 resolution to nationalise the Bank, he used some rather strange language that undermines the established legal framework that ownership of the Bank has nothing to do with its operational autonomy. The Bank has an explicit constitutional mandate and who own it has no bearing on that.  

Doing away with private shareholders, Ramaphosa said, will “give us sovereignty”. What could this possibly mean? Is there any way to read it other than as a suggestion that the shareholders do, after all, have an impact on policy.

It wouldn’t be unreasonable for potential investors — who see the independence of the Bank, if not necessarily its policy decisions on interest rates, as one of the country’s key strengths — to interpret the statement as an implied attack on its independence. Is he suggesting that  he, or whoever is president after the elections, will have more influence on the Bank’s policy once the ownership structure has changed. 

Other than the vague appeal to sovereignty, he didn’t provide any evidence why it’s crucial for “the people of SA” to have full ownership of the Bank and why this policy, born out of the ANC’s factional fights rather than a genuine analysis of the national interest, needs to be implemented despite the obvious cost and no discernible upside.

Bank governor Lesetja Kganyago complained in 2018 that the debate was an unnecessary distraction when he had so much to worry about, including the turmoil that was at the time playing havoc with emerging markets, including SA.

Less than two months before what is set to be a divisive election, he has to engage with it again. He has said in the past that nationalising the Bank could cost anything between R20m and R100bn.

The latter number is about two-thirds of what the government is planning to spend saving Eskom over the next decade. When one considers all the country’s massive problems, from failing municipalities to public hospitals without needles, how could Ramaphosa, or whoever wrote the parliamentary answer for him, justify spending this money enriching Bank shareholders, some of whom are foreigners? 

The idea surely is to attract foreigners’ cash to these shores and not to unnecessarily gift them some of ours — cash we don’t even have.